Get Paid Faster with Factoring for Janitorial Service Providers
Commercial building managers in the public and private sectors rely on janitorial service providers to keep their facilities clean and functional. However, when those clients take 30 days or longer to pay outstanding invoices it can create a cash flow crunch in which a janitorial company cannot operate effectively. Fortunately, there is a solution. With invoice factoring for janitorial services, you can secure the working capital you need to keep every client up and running.
How Does Invoice Factoring for Janitorial Services Work?
Receivables factoring for janitorial service providers is a simple series of transactions that convert your unpaid invoices into cash you can use to run your business. When you are approved for factoring, you can submit invoices of any amount at any time to maintain adequate working capital. In simpler terms, you can exchange (sell) your outstanding invoices to a factoring company for cash.
A typical janitorial factoring transaction looks something like this:
- Perform janitorial services for your customer. Send them an invoice for the work and submit a copy to the factoring company.
- The factor will verify that you completed the work and that the invoice is accurate; they will then send you up to 90 percent of the invoice amount within 24 hours.
- Continue working – serve the same customer or others, invoice them and submit invoices to the factoring company as necessary.
- In the meantime, the factor will work with your customers to collect their open invoices. When the invoice is paid, the factor will send you the remaining funds minus a small factoring fee.
There are no limits to how you can use the cash you receive from factoring invoices. You can fund payroll to hire new staff to cover larger buildings or accept new clients; purchase equipment and supplies to complete your work more effectively; or introduce new services to increase your revenue. Because ar factoring is based on your sales, everything you put into your business will open up even more cash flow potential to grow further!
What to Include in an Invoice for Janitorial Services
When creating an invoice for janitorial or commercial cleaning services, it is important to include the following information:
- Service Provider Information: Include your company’s name, address, contact details, and any applicable tax identification numbers.
- Client Information: Provide the client’s name, address, and contact information. If necessary, include any billing department or specific contact person.
- Invoice Details: Assign a unique invoice number and include the invoice date, which is the day the invoice is issued. This number helps with record-keeping and facilitates communication between you and your client.
- Payment Terms: Clearly state the payment terms, such as the due date and the accepted payment methods. This ensures both parties are aware of when and how the payment should be made.
- Description of Services: Provide a detailed description of the janitorial or commercial cleaning services rendered. Be specific about the tasks performed, the date(s) of service, and the duration of each service visit.
- Itemized Charges: Break down the charges for each service provided. This can include hourly rates, a flat fee, or separate costs for specific tasks or materials used. Make sure the charges are clear, concise, and easy to understand.
- Additional Fees and Discounts: If applicable, mention any extra fees, such as late payment fees or special service charges. On the other hand, include any applicable discounts or promotions you are offering.
- Sales Tax: If required by law, calculate and include the applicable sales tax for the services rendered.
- Total Invoice Amount: Clearly state the total amount due, including all charges and taxes, after applying any discounts or additions.
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Benefits of Receivables Factoring for Janitorial Service Providers
Factor Finders’ nationwide network of factoring partners are committed to helping your janitorial company thrive through far more than a simple transfer of funds. Take advantage of the assorted benefits of a receivables factoring relationship.
Office management support
Your janitorial company depends on income producing activities to generate revenue, the most important of which is actually providing janitorial services. Your factoring company will handle a number of your company’s administrative tasks so you can stay focused on completing jobs. Expertise in the janitorial industry allows your factor to handle issues with workers’ compensation, payroll and A/R management to meet your standards and those of the industry. Many factors will also complete credit and background checks on your customers for no additional fee.
With cash on hand, you can negotiate with your suppliers to receive discounts for fast payment or bulk orders. Keep more money in your pocket!
No long-term contracts
Invoice factoring for janitorial services, while an excellent financing solution, may not be the right choice for your company permanently. Don’t stay trapped in a long-term contract; instead, sign a six-month or one-year agreement and regularly evaluate the relationship so it continues to work for you as long as you need it. It is very important to understand the terms of the contract before signing.
Qualify with poor credit
Even if your company has been declined for traditional bank loans or lines of credit, you can still qualify for a receivables factoring program. Janitorial factoring companies evaluate their funding decisions on your customers’ creditworthiness – as long as you are providing services to reliable customers, we can find the right program for you.
Receivables Factoring for Janitorial Companies
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Additional Invoicing Tips for Janitorial Services
For janitorial and commercial cleaning businesses, here are some additional invoicing tips to help streamline your payment process:
- Send prompt invoices: Make it a priority to send invoices to your customers as soon as your services are completed. The quicker you send the invoice, the faster you are likely to receive payment.
- Clearly label and organize invoices: Assign unique invoice numbers to each transaction, allowing for easy reference and tracking. This will also help in case customers have any inquiries or need clarification.
- Set shorter payment terms: Consider setting shorter payment terms than the industry standard. While net 30 terms are common, you can adopt net 15 or even net 7 to encourage quicker payment from customers.
- Provide multiple payment options: Offer various electronic payment options such as online payment gateways, credit/debit card payments, and electronic fund transfers. This adds convenience for customers, making it more likely that they will pay promptly.
- Implement recurring invoicing: If you have long-term clients or provide regular services, consider setting up recurring invoices. This can automate the invoicing process, ensuring that you consistently receive timely payments without having to manually create invoices each time.
- Clearly state payment terms and due dates: Include clear and concise payment terms on each invoice, specifying the due date, preferred payment methods, and any consequences for late payments. This helps set expectations with customers and encourages timely payment.
- Offer discounts for early payments: To incentivize prompt payment, consider offering discounts or incentives for customers who settle their invoices before the due date. This can help motivate customers to pay promptly and improve your cash flow.
- Follow up on late payments: Keep track of your outstanding invoices and send gentle reminders to customers with overdue payments. A polite yet firm follow-up can often prompt customers to pay their dues promptly.
Remember, effective invoicing practices are crucial for maintaining a healthy cash flow for janitorial and commercial cleaning businesses. By implementing these tips, you can expedite the payment process and ensure timely receipt of funds for your services.
Start Invoice Factoring for Janitorial Services
Begin factoring your janitorial services right away, whether you serve commercial or residential buildings, schools, or even government facilities. If you invoice other companies for your work, you’re already well on your way to being approved.
The application and underwriting process is simple and in most cases can be completed in as little as 3 to 5 business days. All you need to get started are:
- Articles of Incorporation
- Copies of invoices you wish to factor
- Current customer list
- List of outstanding invoices
See how Factor Finders can help your janitoral services company.